Economy: Growth Remains Steady
Boise continued to post solid economic performance in Q3 2026, leading all tracked markets with population growth of 2.3% year-over-year (YOY). Median household income climbed 5.0% YOY to $96,600, supporting consumer spending and economic activity. Nonfarm employment expanded to 417,800 jobs, up 0.8% YOY, while healthcare employment grew to 61,100 jobs. The unemployment rate remained at 3.4%, below the U.S. rate of 4.2%. Looking ahead, continued growth in population, income, and employment is expected to support business expansion and commercial real estate demand throughout the Boise market.
Supply & Demand: Record Absorption Drives Vacancy Lower
Boise's industrial vacancy rate declined to 8.4% in Q3 2026, down 100 basis points (bps) quarter-over-quarter (QOQ), as record net absorption of 1.5 million square feet (msf) outpaced new supply additions and reduced available inventory across the market. Direct vacant space fell to 4.8 msf, while sublease vacancy declined to approximately 191,000 square feet (sf) and now represents a relatively small share of total vacancy. The quarter marks a notable shift from the elevated availability levels that emerged during the recent development cycle, with record absorption helping to reverse rising vacancy trends.
Net absorption totaled a record 1.5 msf during the quarter, exceeding the 939,000 sf delivered and contributing to the decline in vacancy despite continued development activity. Warehouse and distribution properties accounted for the vast majority of occupancy gains, supported by strong demand from manufacturing, industrial suppliers, and logistics users.
Leasing activity remained concentrated in modern distribution facilities, reflecting continued demand from occupiers serving the region's expanding industrial and manufacturing base. Several large occupancies within recently completed projects helped absorb available inventory, while strong tenant demand supported the market's best quarterly absorption performance on record. Leasing volume increased to approximately 1.3 msf during Q3, up from roughly 1.0 msf in the prior quarter. Activity remained concentrated in Nampa, Meridian, and the Airport submarket, where tenants continued to favor modern warehouse and distribution facilities. Demand was driven by manufacturing
firms, industrial suppliers, contractors, warehousing and logistics operators, and professional service providers. The breadth of leasing activity across multiple industries suggests occupier demand remains broadly supported throughout the Boise industrial market.
Construction activity remained elevated with approximately 7.2 msf underway at quarter end, though roughly two-thirds of the pipeline consists of build-to-suit development, including Micron's ongoing expansion. More than 2.0 msf remains under construction on a speculative basis, with approximately 1.7 msf currently available for lease. While 38.5% of speculative deliveries completed during Q3 remained vacant at quarter end, the quarter's record net absorption demonstrates continued demand for newly delivered industrial product.
Pricing: Asking Rates Continue To Trend Higher
Boise's industrial asking rent increased to $0.93 per square foot (psf) NNN, rising 3.0% QOQ and 4.5% YOY. Asking rates continued to trend higher as strong leasing activity and occupancy gains within the warehouse/distribution segment supported overall market pricing. While newly delivered speculative buildings continue to offer tenants multiple occupancy options, declining vacancy supported rent growth across the market. As a result, asking rates remained near historical highs despite continued development activity.
Rental performance varied by product type during the quarter. Warehouse and distribution rents increased to $0.88 psf NNN, up 3.5% QOQ, driven by continued demand within Boise's largest industrial segment. Office Service rents reached $1.19 psf NNN, the highest among Boise's primary industrial product types, while manufacturing rents were $1.03 psf NNN. Despite modest quarterly fluctuations among product types, all three major industrial segments recorded YOY rent growth.
Investment: Improving Fundamentals
Investment activity remained steady in Q3 2026 as investors continued to target well-leased warehouse/distribution and office service assets with durable cash flow and limited rollover risk. Improving market fundamentals and greater alignment between buyers and sellers supported transaction activity during the quarter. Boise's improving occupancy trends and record absorption have reinforced long-term investor confidence.
